News

Kensington on Acquisition Trail
Jim Milliot -- 2/5/01

Having successfully integrated the 1,600 titles it acquired through its purchase of the assets of Carol Publishing last year (News, April 3, 2000), Kensington Publishing is looking to make several additional purchases this year. "We have the infrastructure in place to expand, and we hope to add more than one company very soon," Steve Zacharius, president of Kensington, told PW. According to company founder and chairman Walter Zacharius, Kensington is looking to acquire backlist-oriented publishers in the $2-million to $10-million range that publish in niche areas such as alternative health, African-American, inspirational or religious, romance, and gay and lesbian fiction.

The Carol purchase, through which Kensington added the Citadel and Lyle Stuart imprints, has "worked out great," Steve Zacharius said. The purchase deepened the previously frontlist-heavy Kensington publishing program and helped increase the company's sales through trade outlets
Walter Zacharius (center) chairs recent
Kensington editorial meeting.
while reducing its sales through the still messy ID market. As a result, returns are way down, with Citadel enjoying a particularly high sell-through, Walter Zacharius said. Total sales for the first quarter ended December 30, 2000, were $1 million ahead of budget, prompting the Zachariuses to up Kensington's sales forecast for the fiscal year ending September 30, 2001, from $47 million to about $50 million; sales in fiscal 2000 were just over $40 million. More important, the company is looking at a dramatic jump in profitability as it leverages higher title output over an existing infrastructure that includes a new computer system and improved sales, marketing and distribution functions. The addition of new personnel has resulted in significantly higher sales in Kensington's export and Canadian operations as well as in the sub rights field.
Kensington is not depending on acquisitions alone to grow the company. The publisher has changed the focus of its romance publishing program, which remains its largest business by far, from historical romance to contemporary romance and plans to add a new contemporary book club to its ranks early this year. Book clubs have historically represented about 10% of Kensington's total sales, with high profit margins. Kensington has also altered its Hispanic publishing program, Encanto, by changing its original format of publishing books in Spanish and in a bilingual edition to publishing an English-only edition. The company is also upgrading the cover designs to appeal to a more upscale audience; first books in the remodeled line, which will feature two titles per month, are set to be released by the middle of the year. Kensington's African-American publishing program, however, continues its steady expansion. Its Dafina line is releasing one title per month and later this year will reprint a mass market edition of one of its first hardcovers, Here and Now. The company continues to publish and distribute the Arabesque line, which it developed and sold to BET Holdings in 1998.

Other solid performing areas include the health market, where Kensington has done well in both the alternative and traditional medical publishing segments. The Zachariuses have high hopes for the gay and lesbian field, where the company plans to release 10 titles this year and is working on plans for its www.gayandlesbianbooks.com Web site.

One area where Kensington continues to move cautiously is in electronic publishing. The company has identified the books to which it holds electronic rights, but to date has digitized only a few titles. "We're waiting to see what the market demand is," Steve Zacharius said, noting that "right now we prefer to spend our money on acquisitions."